Write out the profit-maximization conditions for a monopolist to mark-up over price. That is, what is...

Write out the profit-maximization conditions for a monopolist to mark-up over price. That is, what is (PMC)/P equal to if the monopolist is profit-maximizing. From there, solve for PMC to give a measure of the degree to which the monopolist price is distorted from the long-run perfectly competitive price, P = MC. This is the distortion for a monopolist in a one-sided market. Now, refer to your notes on the markup rule for a profit-maximizing platform monopolist in a two-sided market. Is the platform monopolist’s price on one side of the market more or less distorted than that for a monopolist in a one-sided market? Explain.

Expert Solution

Rahul Sunny answered 1 year ago

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